Saturday, May 30, 2009

LOS ANGELES (May 28) – Home sales increased 49.2% in April in California compared with the same period a year ago, while the median price of an existing home declined 36.5%, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) reported today.“With annualized sales at 540,360 units, April marked the eighth consecutive month of home sales above the 500,000 level,” said C.A.R. President James Liptak.Closed escrow sales of existing, single-family detached homes in California totaled 540,360 in April at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR associations statewide. Statewide home resale activity increased 49.2% from the revised 362,170 sales pace recorded in April 2008 (see chart above). Sales in April 2009 increased 3.2% compared with the previous month.The median price of an existing, single-family detached home in California during April 2009 was $256,700, a 36.5% decrease from the revised $404,470 median for April 2008, C.A.R. reported. The April 2009 median price rose 1.4% compared with March’s $253,040 median price.

C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in April 2009 was 4.6 months, compared with 9.8 months (revised) for the same period a year ago (see chart below). The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. The median number of days it took to sell a single-family home was 48.7 days in April 2009, compared with 51.8 days for the same period a year ago.

MP: In March, the California median home price showed the first monthly increase since August 2007, and has now increased for two months in a row with the monthly increase in April. Falling prices compared to last year are stimulating unit sales, homes are selling faster than last year, unsold inventory of homes is decreasing as the market clears excess supply. Markets are working for California real estate.

11 Comments:

I'm not sure if I believe that home prices are rising in California, but I do know that inventory is falling at a steady rate. ListingSupply.com has been showing that supply is falling in the Southwest and Florida. I think the rest of the country, the midwest and northeast in particular, is in for a l o n g wait before their markets show signs of life.

"MP - In March, the California median home price showed the first monthly increase since August 2007, and has now increased for two months in a row with the monthly increase in April. Falling prices compared to last year are stimulating unit sales, homes are selling faster than last year, unsold inventory of homes is decreasing as the market clears excess supply. Markets are working for California real estate."

I am just wondering what in the above statement is fallacious or objectionable. If the data are misrepresented or there is an error, it should be fairly easy to show data from another source which contradicts it. If the error is with the host's statement regarding markets working, then I'd like to see some counterargument to this statement. I haven't really seen any of that in this thread and am just interested in additional insight - especially from the perspective of those living in CA. I haven't read anything from the host in which he makes any claims that seem out of line, but am open to reading more (intelligent posts) on this topic.

Robert, agree that there are many unseen costs associated with the real estate bubble explosion in California, but I don't see how Prof.Perry is in any way suggesting that it was a good thing for the bubble to have existed and exploded (to make it applicable to the broken window fallacy).

He's simply pointing out that prices have dropped to the market clearing point in many cases - although further declines may be necessary, if there is further inventory to be put back onto the market due to more foreclosures.

Given what has happened the best thing that can happen is that prices and markets are allowed to work here - the worst thing that can happen is that the government "intervenes" to help

NW "I am just wondering what in the above statement is fallacious or objectionable."

I have no objection to the validity of the Prof's statements. I have an issue with his cheerleading the recovery. Look back at the numerous posts about the "Baltic Dry Index" for example. By only looking at data that validates his thinking he's in error. There are plenty of other indexes that point the other way (no recovery soon). For real estate you may want to look at foreclosure activity; and for the overall economy you may want to look at unemployment.